Capital Gains Tax Relief
Navigating Capital Gains Tax (CGT) can be a daunting prospect, and many turn to a qualified accountant for help. Whether you’re selling a property, shares, collectables or other assets, you’ll need to calculate how much tax you owe once you’ve factored in the purchase price of the asset, stamp duty and legal costs, improvement costs and selling costs.
It’s also important to understand the current Annual Exempt Amount, which for 2025-26 is £3,000. This exempts you from paying Capital Gains Tax on any value below £3,000, but cannot be carried forward if unused. Here, we outline five CGT reliefs that you may be eligible for.
- Spousal transfers
Assets that are transferred between spouses or civil partners are not considered a gain for CGT purposes. This allows couples to share ownership of assets in the way that suits them, use both parties’ CGT allowances and time disposal of assets more tax-efficiently.
- Private residence relief
Private Residence relief (PRR) applies when you sell a property that was your main home. For example, say you owned a flat for ten years and lived there for three years before renting it out. You could claim PRR for the three years in which you lived at the flat, plus the final nine months of ownership.
- Lettings relief
Landlords who share occupancy of a property with their tenants can claim lettings relief. PRR is restricted to the percentage of the property you occupied, and lettings relief applies to the other portion. You can claim the lower of:
-
- an amount equal to the PRR you claim on the property,
- £40,000 in relief (£80,000 for couples who jointly own a property), or
- the capital gain made during the letting period
- Business Asset Disposal relief
Business Asset Disposal relief (BADR) awards business owners with a reduced CGT rate on gains from the sale of a substantial number of shares or assets of their personal company. For the 2025-26 tax year, the BADR rate is 14% (compared to the standard CGT rates of 18% or 24%).
Strict eligibility criteria apply for this relief, so be sure to check with a reputable accountant before claiming.
- Gift Hold-Over relief
If you are giving business assets or shares away, or selling them for less than market value, you may qualify for Gift Hold-Over relief. This exempts you from paying CGT if you give assets away for free, or enables you to use the proceeds to calculate CGT if you sell them at a reduced price.
To claim Gift Hold-Over relief, you must be a sole trader or business partner, or hold 5% or more of the shares in a limited company. It’s also worth noting that when the person to whom you have transferred the asset comes to sell it, they will pay CGT on both their gain and the gain you claimed Gift Hold-Over relief against.
If you would like help with calculating CGT and understanding your eligibility for the available reliefs, speak to a reputable accountant today.
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